What Congress Blockchain Hearing Has Discussed?

“Blockchain technology brings potential applications for shipping, logistics and customs, and it can serve as a force for good for both private and public sectors.”

It has been reported that U.S. House Subcommittees on Oversight and on Research and Technology gathered on May 8th to hold a blockchain hearing which is aimed at discussing the utilizing blockchain technology to improve supply chain management and combat counterfeit goods.

The hearing was chaired by Ralph Abraham of Louisiana, and he initially emphasized that blockchain technology brings potential applications for shipping, logistics and customs, and it can serve as a force for good for both private and public sectors. He also highlighted that the state officials were committed to utilize private businesses’ experience with blockchain to improve the efficiency of government in these particular domains.

As has been reported, this hearing witnessed the testimonies of four representatives from both public and private sectors, with the goal of discussing the application of blockchain. Among the four speakers three come from private sectors, and they are Robert Chiaviello, an IPR counsel who spoke on behalf of baby goods company Luv n’care, and Michael White, head of global trade digitization at the world’s largest container shipper Maersk, and also Chris Rubio, vice president for global customs brokerage at UPS. The only representative representing the federal government was Dr. Douglas Maughan, cyber security division director for the Department of Homeland Security (DHS).

DHS：Active in developing and testing blockchain-based approches

Dr. Maughan was the first representative speaking in the hearing, and he acknowledged blockchain’s ability in enhancing the speed and quality of transactions by making them more transparent, auditable and automated. He also lamented that due to the interconnection of global markets and industries, the introduction of distributed ledger technology (DLT) into companies for managing enormously complex supply chains is now faced with the lack of interoperable interfaces and standardized approaches. Considering the situation, he reassured House representatives that DHS is active in developing and testing blockchain-based approaches to supply chain management for the standardization and open specifications incorporation thereof. Also he specially mentioned the application of blockchain solution for the U.S. Customs and Border Protection Agency to make sure the authenticity of security camera footage.

Luv n’care: International shipping is in need of blockchain

Then Robert Chiaviello stated that Luv n’care is now facing the unfair competition from overseas companies, and due to the inefficiency and insufficient transparency of supply chains, its products distribution has been receiving much negative effects. What’s worse, with the advent of loosely regulated digital commerce and direct international shipping of goods through open borders, foreign companies have started to illegally use the brand of Luv n’care to market their own baby products of inferior quality. He pointed out that the structure of online retail operations is making it harder to prevent knockoff goods from coming into America, as these goods come in individual shipments, which makes shippers and customs agencies incapable to obtain essential information needed to identify the counterfeit inside. This has exerted negative effect to many domestic manufacturers and it poses a threat to consumer welfare.

Maersk: Blockchain is the only technology to ensure the level of trust

Michael White, the representative from Maersk, stressed the importance of international trade to America and global economy, but the present information system tends to be convoluted and oftentimes inefficient. He said that many essential procedures that make the movement of goods possible are manual and time consuming, and often paper-based. The present international trade is in need of an open and neutral platform to completely improve its efficiency, and the core of the platform is to create a global network which connects all the blockchain users, and blockchain is the only technology available to create this platform and ensure the level of trust thereof.

UPS: A global blockchain-based shipment tracking system benefits not only large corporations

Chris Rubio revealed that UPS has been investing heavily in blockchain technology so as to explore approaches to enhance efficiency and security of its supply chain. He outlined four key benefits of DLT that the global logistics company acknowledges: integrity, transparency, interoperability, and security. The introduction of blockchain is able to reduce frictions in supply chains and speed them up. He also mentioned that a global blockchain-based shipment tracking system benefits not only large corporations bus also small and med-sized companies. Therefore, we need a supply chain-wide commitment and shared standards.

The threat from quantum computing cloud

In the Q&A section, the two representatives Bonamici and Beyer raised the question of whether the developing quantum computing cloud would at some point break blockchain. Dr. Maughan did not deny that such a concern exists, but he maintained that the application of quantum computing is 15-20 years out and blockchain is already existing in our society.

Cooperation with standards organizations

Congressman Randy Hultgren was interested in the scope of cooperation between the witnesses’ organizations and entities developing shared standards and specifications for both blockchain and other internet-based industries. According to Rubio and White, both UPS and Maersk are involved with Blockchain in Transport Alliance (BiTA), and Maughan added that DHS is cooperating with the World Wide Web Consortium and the OASIS organization in its work on open specifications for blockchain-powered systems.

Digital records vs. real-life events

Abraham raised the discrepancy between a digital record of the event or object which has been stored in a blockchain and its physical manifestation. It should be pointed that the main use of DLT in blockchain is to store digitalized documents. But it is still possible to bring digital records and tangible facts closer together. For instance, Chris Rubio of UPS described the potential use of X-rays to “look” inside containers, followed by automatic verification of the goods found inside against blockchain-stored records.

Voting does not need blockchain

Some representatives in the hearing were interested in the limits of DLT’s application. Among the relevant answers, the most convincing one came from Dr. Maughan who believes that blockchain could play an important role in multi-party cooperation while it may not be so useful in the operations of individual organizations. And when the congressman Beyer inquired Dr. Maughan about whether blockchain is needed to be applied in voting, he said it is not as when a person is voting, he only wants to share his vote with a single local election authority, so the multi-party principle is not applicable.

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